Wireless DM on the Rise in Busiest Elevators

The booming business-to-business real estate market and the ever-expanding world of wireless communications have finally discovered each other, and the result will bring a new kind of multilevel marketing to the world's tallest buildings -- literally.

Two companies leading the way -- Next Generation Network, Eden Prairie, MN, and Captivate Network Inc., Westford, MA -- are retrofitting the country's most heavily traveled elevators with state-of-the art flat panel monitors that will offer continually updated, streaming video news, weather, sports and stock information. The installations also will mean the beginning of some of the most highly targeted marketing campaigns the business world has seen since the advent of the Internet-connected desktop computer.

"This technology really didn't exist with wireless transmission technology even five years ago," said Eric Zitron, vice president of sales at Captivate, which has negotiated agreements with a dozen major U.S. real estate companies. "Only recently has the Internet been able to act as the delivery vehicle."

What's coming is technology that will ultimately give marketers the opportunity to target captive prospects by geography and sector all along the business walkway, he said, from a building's entrance and elevator service to the desktop computer. One of the first communities to get the screens will be New York City, where a collaboration between Otis Elevator Co., Framington, CT, and Next Generation will bring e*Displays transmitting Internet-based content to elevator passengers on flat-panel screens.

But for the foreseeable future, Captivate Network and its recently negotiated agreements with a dozen real estate firms and venture capital companies will likely control 300 million square feet of the country's Class A office space. In addition, several parties have invested $28 million in the company.

Captivate will install screens this year and begin providing customized media feeds to locations in New York, Chicago, Boston, Los Angeles, San Francisco, Dallas, Houston, Atlanta and Washington. Included are contracts with some of the world's most heavily trafficked buildings: Chicago's Sears Tower; San Francisco's The Embarcadero Center; Houston's Houston Center and Greenway Plaza; Atlanta's 191 Peachtree Street; and Washington's Metropolitan Square and Market Square buildings. In 2001, Captivate's reach will extend to Denver, Miami, Philadelphia, Seattle, Austin, TX, and several other major cities.

"Other companies trying to enter the marketplace will have to deal with the fact that our company has established the first real mover advantage in the arena," said Michael DiFranza, president/CEO of Captivate. "We also have patented technology behind our delivery system allowing elevator display monitors to be wirelessly updated on a moment's notice. This is a not a trivial technical issue to solve. It took us almost a year to solve the difficulties of operating a wireless LAN in an elevator shaft. Without wireless, the deployment costs are three to four times greater."

DiFranza said service can be established in smaller buildings -- a likely prospect among his competitors -- but economics are not nearly as attractive, noting also that "major prestige office buildings command the highest rents and, therefore, the highest-end tenants with the most desirable demographic for advertisers."

So why doesn't his company have a more intimate relationship with Otis Elevator, the world's largest elevator manufacturer?

"We talked with Otis for almost a year, from 1998 to 1999, and we finally had to pass on a partnership because they wanted an exclusive arrangement, i.e., Captivate screens could only be in Otis elevators. Since they only have a minority of the office buildings, this wasn't feasible for us. Our business model is based on giving advertisers access to the largest distribution possible."

Otis spokesman Matthew Broder said there are 6 million elevators in the world and "potentially every one of them is capable of being retrofitted with a flat-screen Internet connection." While Captivate may be a more formidable player in the U.S. market at the moment, he said, the new technology presents opportunities that exist as part of a big global marketplace

"You have to remember, we maintain 1.2 million elevators," Broder said. "The vast majority of those are outside the United States.